Why Blythe Masters Left JP Morgan

Linette Lopez, provided by

Published 8:43 am, Friday, April 11, 2014

Since last summer, when JP Morgan announced that it would sell its commodities unit, Wall Street wondered what would happen to its powerful head, Blythe Masters.

Then last month JPM found a buyer, and last week Masters announced she would exit JPM, her future uncertain.

Bloomberg has a report on what happened between those headlines. Masters put herself aside during the deal making, but made it clear she wanted to go with her unit.

It didn't work out though because at the ultimate buyer, Mercuria, she simply wasn't needed.

Without her unit, Masters knew she would lose clout at JP Morgan. So she left.

Masters is generally credited with creating the credit default swap and enjoyed basically legendary status in the world of finance. In short, she was one of the most powerful women on the Street.

When she started negotiating the deal for her unit — with suitors Blackstone, Mercuria and Macquarie — she was shuttled to and from meetings with armed security guards. It was said that all along, the intention was that she go with her business as CEO.

Included in the binder that JPMorgan distributed to some of the bidders was an organizational chart titled, “Possible NewCo management team.”

The chart listed the executive jobs that would exist after the sale of the bank’s commodities business, such as the president and chief operating officer. All remained blank, except the box for the chief executive officer. That contained Masters’s name.

According to the report, Blackstone seemed like it would take the deal and Masters with it, but the private equity firm may have backed out when it found out about federal probes into Masters. Authorities are investigating whether or not she had a role in JPM's admitted manipulation of energy markets during her tenure there.

When Mercuria stepped up, the firm made it clear it did not need Masters to go along.

A person familiar with the transaction at JPM had said that it might take months to find out what would happen to Masters, so the news that she would leave the firm for free fall surprised a lot of people last week.

Before, it seemed possible that she would stay at the firm. JPM employees have said her exit would hurt morale, which been low since the London Whale trading loss lost the bank $6.2 billion in 2012 and robbed it of its golden status as the lone survivor of the turmoil of 2008.